Yangarra Resources Ltd. — Interim / Quarterly Report 2022

Nov 1, 2022

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Yangarra Resources Ltd. Condensed Interim Consolidated Financial Statements For three and nine months ended September 30, 2022 and 2021

Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Financial Position

(in thousands of Canadian dollars)

		September 30		December 31
		2022		2021
		(unaudited)		(audited)
Assets
Current
Accounts receivable_(note 10a)_	$	34,929	$	27,536
Prepaid expenses and inventory		7,659		5,022
Commodity contracts_(note 10c iii)_		22		–
Interest rate contracts_(note 10c i)_		–		191
Total current assets		42,610		32,749
Non-current
Property and equipment_(note 2)_		682,645		627,948
Exploration and evaluation assets		26,230		22,342
Interestrate contracts (note 10c i)		–		430
Total assets	$	751,485	$	683,469
Liabilities
Current
Accounts payable and accrued liabilities_(note 10b)_	$	35,925	$	33,930
Commodity contracts_(note 10c iii)_		33		11
Interest rate contracts_(note 10c i)_		–		79
Current portion of decommissioning liability_(note 5)_		210		105
Current portion of lease obligations_(note 4)_		2,189		2,353
Total current liabilities		38,357		36,478
Non-current
Bank debt_(note 3)_		153,859		195,422
Lease obligations_(note 4)_		1,393		2,372
Other liabilities		866		589
Interest rate contracts_(note 10c i)_		–		178
Decommissioning liability_(note 5)_		13,707		13,691
Deferred tax liability		95,163		69,780
Total liabilities		303,345		318,510
Shareholders' equity
Share capital_(note 6)_		179,634		178,110
Contributed surplus		28,512		28,142
Retained earnings		239,994		158,707
Total shareholders’ equity		448,140		364,959
Total liabilities and shareholders’ equity	$	751,485	$	683,469

Contingency (note 14)

The accompanying notes are an integral part of these condensed interim consolidated financial statements

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Yangarra Resources Ltd.

Condensed Interim Consolidated Statements of Income and Comprehensive Income For the three and nine months ended September 30 (unaudited, in thousands of Canadian dollars, except per share amounts)

	Three months ended September 30 Nine months ended September 30	Three months ended September 30 Nine months ended September 30
	2022 2021 2022	2021
Revenue Petroleum and natural gas sales_(note 13)_ Royalties	$ 62,791$ 35,880 $ 182,764 (5,333) (2,539) **(13,543) **	$ 92,884 (5,435)
Commodity price risk contracts_(note 10c iii)_ Loss on commodity contract settlement Unrealized change in fair value of commodity contracts	57,458 33,341 169,221 (325) (267) (3,026) 821 (97) 1	87,449 (3,657) (1,104)
	57,954 32,977 166,196	82,688
Expenses Production Transportation General and administrative Finance_(note 12) Share-based compensation(note 7) Depletion and depreciation(note 2)_	6,765 4,573 17,135 1,248 789 3,559 841 763 2,762 2,960 2,694 8,072 168 392 506 9,779 6,109 27,492	12,405 2,586 1,929 6,678 951 18,473
	21,761 15,320 59,526	43,022
Income before tax Deferred tax expense	36,193 17,657 106,670 8,257 4,157 25,383	39,666 9,296
Net income and total comprehensive income	$ 27,936$ 13,500$ 81,287	$ 30,370
Earnings per share(note 8) Basic Diluted	$ 0.32$ 0.16 $ 0.93 $ 0.30$ 0.15 $ 0.88	$ 0.35 $ 0.34

The accompanying notes are an integral part of these condensed interim consolidated financial statements

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Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Changes in Equity For the nine months ended September 30 (unaudited, in thousands of Canadian dollars)

		2022		2021
Share capital
Balance, beginning of period	$	178,110	$	176,349
Exercise of stock options_(note 6)_		1,040		623
Contributed surplus transferred on exercise of stock options_(note 6)_		484		310
Balance, end of period		179,634		177,282
Contributed surplus
Balance, beginning of period		28,142		27,218
Share-based compensation_(note 7)_		854		1,144
Exercise of stock options_(note 6)_		(484)		(310)
Balance, end of period		28,512		28,052
Retained earnings
Balance, beginning of period		158,707		108,693
Netincome		**81,287 **		30,370
Balance, end ofperiod		**239,994 **		139,063
Total shareholders’ equity	$	448,140	$	344,397

The accompanying notes are an integral part of these condensed interim consolidated financial statements

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Yangarra Resources Ltd. Condensed Interim Consolidated Statements of Cash Flows For the three and nine months ended September 30 (unaudited, in thousands of Canadian dollars)

	Three months ended September 30 Nine months ended September 30
	2022 2021 2022 2021
Operating Net income for the period Add back non-cash items: Unrealized change in fair value of commodity contracts Finance expense_(note 12) Share-based compensation(note 7) Depletion and depreciation(note 2) Deferred tax expense Interest and finance costs paid(note 12) Decommissioning costs incurred Change in non-cash working capital(note 9)_	$ 27,936$ 13,500 $ 81,287$ 30,370 (821) 97 (1) 1,104 2,960 2,694 8,072 6,678 168 392 506 951 9,779 6,109 27,492 18,473 8,257 4,157 25,383 9,296 (2,677) (2,823) (7,353) (8,415) – (121) – (465) 1,838 (1,927) (6,398) (3,561)
Net cash flow from operating activities	47,440 22,078 128,988 54,431
Financing Exercise of stock options_(note 6) Bank debt repayment(note 3) Lease obligation repayment(note 4) Lease interest paid(note 12) Realized interest rate contract settlement(note 12)_ Other long-term liabilities advance	– 406 1,040 623 (10,805) (275) (41,920) (1,283) (620) (443) (1,673) (1,311) (85) (88) (258) (274) – – 393 – – 619 277 619
Net cash flow (usedin)from financing activities	(11,510) 219 (42,141) (1,626)
Investing Additions to property and equipment_(note 2) Additions to exploration and evaluation assets Change in non-cash working capital(note 9)_	(33,096) (23,474) (81,322) (61,529) (3,506) (41) (3,888) (175) 672 1,218 (1,637) 8,899
Net cash flow usedin investing activities	(35,930) (22,297) (86,847) (52,805)
Change in cash Cash, beginning of the period	– – – – – – – –
Cash, end of the period	$ –$ –$ –$ –

The accompanying notes are an integral part of these condensed interim consolidated financial statements

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

1. Basis of preparation and statement of compliance and authorization

Yangarra Resources Ltd. (the “Company” or “Yangarra”) is a publicly traded company involved in the production, exploration and development of resource properties in Western Canada. The address of the registered office is 1530, 715 – 5 Avenue SW, Calgary Alberta, T2P 2X6.

These condensed interim consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Yangarra Resources Corp., after the elimination of intercompany transactions and balances.

These condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard 34 – Interim Financial Reporting on a basis consistent with the accounting, estimation and judgement policies described in the Company’s audited consolidated financial statements as at and for the year ended December 31, 2021 (the “Annual Financial Statements”). These condensed interim consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments and stock options which are recognized at fair value. All financial information is reported in Canadian dollars, unless otherwise noted. Certain information and disclosures normally included in the notes to the Annual Financial Statements prepared in accordance with International Financial Reported Standards have been condensed or omitted. These condensed interim consolidated financial statements should be read in conjunction with the Annual Financial Statements.

The condensed interim consolidated financial statements were authorized for issue by the Company’s Board of Directors on October 31, 2022.

2. Property and equipment

	Oil and Natural Gas Interests Well and Plant Equipment Other Assets	Total
Cost Balance, December 31, 2021 Cash additions Share-based compensation_(note 7) Decommissioning liability(note 5)_ ROU asset addition Balance, September 30, 2022 Depletion and depreciation Balance, December 31, 2021 Depletion and depreciation ROU asset depreciation Balance, September 30, 2022 At December 31, 2021 At September 30, 2022	$ 712,184 $ 141,291 $ 15,258 71,138 9,604 580 348 – – (117) – – – – 636	$ 868,733 81,322 348 (117) 636
	$ 783,553 $ 150,895 $ 16,474	$ 950,922
	$ 214,946 $ 18,328 $ 7,511 23,747 1,936 220 – – 1,589	$ 240,785 25,903 1,589
	$ 238,693 $ 20,264 $ 9,320	$ 268,277
	$ 497,238 $ 122,963 $ 7,747 $ 544,860 $ 130,631 $ 7,154	$ 627,948 $ 682,645

At September 30, 2022, all of the Company’s properties are pledged as security for the bank debt (see note 3). The calculation of depletion for the nine months ended September 30, 2022, included estimated future development costs of $576,673 (December 31, 2021 – $658,037) associated with the development of the Company’s proved plus probable reserves.

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

2. Property and equipment (continued)

Cash additions for the nine months ended September 30, 2022, include $913 (2021 – $962) of recoveries related to the Company's working interest in operated capital expenditure programs on which overhead has been charged in accordance with standard industry operating agreements and $351 (2021 – $257) of capitalized salaries and consulting expenses directly related to geological, drilling and completions.

Included in property and equipment as at September 30, 2022 is $4,207 (December 31, 2021 – $5,159) of right-ofuse (“ROU”) assets associated with the Company’s lease obligations.

3. Bank debt

As at September 30, 2022, the maximum amount available under the syndicated credit facility was $210,000 (December 31, 2021 – $210,000) comprised of a $185,000 (December 31, 2021 – $185,000) extendable revolving term credit facility and a $25,000 (December 31, 2021 – $25,000) operating facility. The amount available under these facilities is re-determined at least twice a year and is primarily based on the Company’s oil and gas reserves, the lending institution’s forecast commodity prices, the current economic environment and other factors as determined by the syndicate of lending institutions (the “Borrowing Base”). If the total advances made under the credit facilities are greater than the re-determined Borrowing Base, the Company has 60 days to repay any shortfall. The facility lasts for a 183-day period and will be subject to its next 364-day extension by November 26, 2022. If not extended by November 26, 2022, the Facility will cease to revolve and all outstanding balances will become repayable one year from that date.

Balance, December 31, 2021	$	195,422
Repayment		(41,920)
Accretion of debt transaction costs		357
Balance, September 30, 2022	$	153,859

As at September 30, 2022, the $153,859 (December 31, 2021 – $195,422) reported amount of bank debt was comprised of $10,149 (December 31, 2021 – $11,564) drawn on the operating facility, $144,130 (December 31, 2021 – $184,373) drawn on the extendible revolving term credit facility and net of unamortized transaction costs of $420 (December 31, 2021 – $515).

The Company is subject to a single financial covenant requiring an adjusted working capital ratio above 1:1 (current assets plus the undrawn availability under the revolving facility, divided by the current liabilities less the drawn portion of the revolving facility and excluding unrealized commodity contracts). The Company was in compliance with this covenant as September 30, 2022 and December 31, 2021. The facility is secured by a general security agreement over all assets of the Company. The total standby fees range, depending on the debt to EBITDA ratio, between 200 bps to 400 bps on bank prime borrowings and between 300 bps and 500 bps on bankers’ acceptances. The undrawn portion of the credit facility is subject to a standby fee in the range of 75 bps to 125 bps.

During the nine months ended September 30, 2022, the weighted average effective interest rate for the bank debt was approximately 6.02% (2021 – 5.42%).

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

4. Lease obligations

The Company incurs lease payments related to the oil hauling fleet, operator/crew trucks and the head office. Leases are entered into and exited in coordination with specific business requirements which includes the assessment of the appropriate durations for the related leased asset.

Balance, December 31, 2021	$	4,725
Additions		636
Lease payments		(1,673)
Accretion		(106)
Balance, September 30, 2022	$	3,582
Current	$	2,189
Non-current	$	1,393

Maturity analysis at September 30, 2022 – contractual undiscounted cash flows

Less than one year	$	2,189
One to six years		2,324
Total undiscounted lease obligations		4,513
Unrecognized imputed interest		(931)
Total lease obligation	$	3,582

5. Decommissioning liability

The following table presents the reconciliation of the carrying amount of the liability associated with the decommissioning of the Company’s property and equipment:

Balance, December 31, 2021	$	13,796
Liabilities incurred		1,262
Effect of change in estimates		(1,379)
Accretion		238
Balance, September 30, 2022	$	13,917
Current	$	210
Non-current	$	13,707

The current portion of decommissioning liability relates to wells the Company plans to abandon and reclaim in the next 12 months as a result of the grant received under phase 5 of the Alberta Site Rehabilitation Program (“SRP”).

The following significant assumptions were used to estimate the decommissioning liability at September 30, 2022:

Undiscounted cash flows	$	17,837
Discount rate		2.27% - 3.79%
Inflation rate		2%
Weighted average expected timing of cash flows		6.3 years

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

6. Share capital

Common shares issued

Common shares issued
	Number of shares	Amount
Balance, December 31, 2021	86,649 $	178,110
Exercise of stock options	1,302	1,040
Contributed surplus transferred on exercise of stock options	**– **	484
Balance,September 30,2022	87,951$	179,634

7. Share-based compensation

During the nine months ended September 30, 2022, the Company granted options to purchase 1,318 common shares exercisable at a weighted average price of $2.60 per share for a period of five years with a variety of vesting periods. The fair value of the options was estimated at $1.29 using the Black-Scholes option pricing model.

During the nine months ended September 30, 2022, the Company recognized $506 (2021 – $951) of share-based compensation in the condensed interim consolidated statement of income and comprehensive income and capitalized $348 (2021 - $193) of share-based compensation to property and equipment.

The following table provides a continuity of stock options outstanding as at:

	Number of	Weighted –
	stock	average
	options	exercise price
Balance, December 31, 2021	8,287	$0.86
Granted	1,318	2.60
Exercised	(1,302)	(0.80)
Cancelled	(467)	(2.15)
Balance, September 30, 2022	7,836	$1.08

The following provides a summary of the stock options outstanding as at September 30, 2022:

Range of exercise price	Number outstanding Weighted-average remaining contractual life (years) Weighted- average exercise price	Number exercisable Weighted- average exercise price
$ 0.45 – $ 0.49 $ 0.50 – $ 1.00 $ 1.01 – $ 1.50 $ 1.51 – $ 2.00 $ 2.00 – $ 2.50 $ 2.51 – $ 3.00 $ 3.01 – $ 3.50	60 3.00 $ 0.45 4,837 2.95 0.57 1,213 3.66 1.35 427 4.13 1.66 761 4.58 2.45 273 4.82 2.57 265 4.64 3.05	60 $ 0.45 4,837 0.57 1,117 1.37 214 1.66 – – – – – –
	7,836 3.40 $ 1.08	6,228 $ 0.75

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

7. Share-based compensation (continued)

The Black-Scholes pricing model was used to estimate the fair value of stock options granted during the nine months ended September 30, 2022 based on the following significant assumptions:

Weighted average exercise price per stock option	$2.60
Risk-free interest rate	2.18% - 3.32%
Expected volatility	66 - 68%
Weighted average expected life	4 years
Forfeiture rate	5%
Weighted average fair value per stock option	$1.29

8. Earnings per common share

Basic earnings per share was calculated as follows:

Basic earnings per share was calculated as follows:
		Three	months ended			Nine	months ended
			September 30				September 30
		2022		2021		2022		2021
Net income for the period	$	27,936	$	13,500	$	81,287	$	30,370
Weighted average number of shares (basic)
Issued common shares at beginning of period		87,951		85,720		86,649		85,380
Stockoptions exercised		–		331		595		324
Weighted average number of common shares-basic		87,951		86,051		87,244		85,704
Net income per share-basic		0.32		0.16		0.93		0.35
Diluted earnings per share was calculated as follows:
Weighted average number of shares (diluted)
Weighted average number of shares (basic)		87,951		86,051		87,244		85,704
Effect of outstanding options		4,658		3,751		4,622		3,212
Weighted average number of common shares-diluted		92,609		89,802		91,866		88,916
Net income per share-diluted		0.30		0.15		0.88		0.34

The average market value of the Company’s shares for purposes of calculating the dilutive effect of share options was based on quoted market prices for the period that the options were outstanding. For the three months ended September 30, 2022, 288 (2021 – 1,318) options were excluded based on an average share price of $2.67 (2021 – $1.44) for the period. For the nine months ended September 30, 2022, 288 (2021 – 2,290) options were excluded as they were out of the money based on an average share price of $2.63 (2021 – $1.22) for the period.

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

9. Change in non-cash working capital

	Three months ended September30 Nine months ended September30
	2022 2021 2022 2021
Accounts receivable Prepaid expenses and inventory Accounts payable and accrued liabilities	$ 2,207$ (1,995) $ (7,393)$ (4,060) (730) (609) (2,637) 32 1,033 1,895 1,995 9,366
	$ 2,510$ (709) $ (8,035)$ 5,338

The changes in non-cash working capital has been allocated to the following activities:

Operating Investing	$ 1,838 $ (1,927) $ (6,398)$ (3,561) 672 1,218 (1,637) 8,899
	$ 2,510 $ (709) $ (8,035)$ 5,338

10. Financial instruments and financial risk management

a. Accounts receivable and credit risk

Purchasers of the Company’s natural gas and liquids are subject to credit review to minimize the risk of non-payment. The maximum exposure to credit risk for the carrying amount of accounts receivable by type of customer was:

	September 30, 2022 December 31, 2021
Natural gas and liquids marketers Partners on joint operations Other	$ 23,255$ 16,186 9,514 8,638 2,160 2,712
	$ 34,929$ 27,536

The Company historically has not experienced any significant collection issues with its natural gas and liquids marketers. The majority of the revenue accruals and receivables from natural gas and liquids marketers were received in October 2022.

The Company’s receivables are aged as follows:

As at	September 30, 2022 December 31, 2021
Under 30 days 30 to 60 days 60 to 90 days Over 90 days	$ 24,823$ 18,453 323 50 1,443 888 8,340 8,145
	$ 34,929$ 27,536

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management (continued)

a. Accounts receivable and credit risk (continued)

96% (December 31, 2021 – 99%) of the over 90-day receivables are made up of three (December 31, 2021 – three) industry partners, for which a significant portion of the balances are in dispute (note 14). The Company has performed an analysis of each partner’s financial situation and determined they have the ability to pay.

b. Liquidity risk

As September 30, 2022, the contractual maturities of the Company’s financial obligations are as follows:

		Carrying Amount	Contractual Cash Flows	Less than 1 year	1-2 Years	2-5 Years
Accounts payable and accrued liabilities		$ 35,925	$ 35,925	$ 35,925	$ –	$ –
Bank debt		153,859	154,279	–	154,279	–
Lease obligations		3,582	4,513	2,189	1,233	1,091
Other liabilities		866	866	–	–	866
Commoditycontracts		33	33	33	–	–
		$ 194,265	$ 195,616	$ 38,147	$ 155,512	$ 1,957

c. Market risk

The Company has exposure to the following market risks:

• i. Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. The Company is exposed to interest rate fluctuations on its bank debt which bears interest at a floating rate and to mitigate this risk, the Company has entered into interest rate contracts. For the nine months ended September 30, 2022, if interest rates had been 1% lower with all other variables held constant, net income would have been $1,285 (2021 - $1,473) higher, due to lower interest expense. An equal and opposite impact would have occurred had interest rates been higher by the same amount. The Company had no interest rate contracts in place as at September 30, 2022.

ii. Currency risk

Foreign currency exchange rate risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in foreign exchange rates. All of the Company’s petroleum and natural gas sales are denominated in Canadian dollars, however, the underlying market prices in Canada for petroleum and natural gas are impacted by changes in the exchange rate between the Canadian and United States dollar. The sensitivity of the fair value of a 10% change in foreign exchange rates would have an immaterial impact the consolidated statements of income and comprehensive income.

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management (continued)

c. Market risk (continued)

iii. Commodity price risk

Commodity price risk is the risk that the fair value or future cash flows will fluctuate as a result of changes in commodity prices.

As at September 30, 2022, the Company was committed to the following commodity price risk contracts:

	Year Volume	Term	Reference **Type **	Strike Price	Fair Value
	Natural Gas
	2022 2,500 GJ/d	Apr - Oct	AECO - Monthly 5A Swap	CAD $4.49/GJ	$ 22
	2022 5,000 GJ/d	Apr - Oct	AECO - Monthly 7A Swap	CAD $4.50/GJ	$ (9)
	Propane
	2022 200 bbl/d	Jan to Dec	Conway - C3 to Mont Belvieu C3 Basis Swap	Plus USD 0.0025/Gallon	$ (24)
	Total				$(11)

As the Company had a limited number of derivatives in place as at September 30, 2022, the sensitivity of the fair value of a 10% volatility in commodity prices would have an immaterial impact on unrealized gains (losses) reported in the consolidated statements of income and comprehensive income.

d. Fair value of financial instruments

The following table summarizes the carrying value and fair value of the Company’s risk management assets and liabilities.

Financial Assets At fair value through profit or loss: Interest rate contracts Commodity contracts Financial Liabilities At fair value through profit or loss: Interest rate contracts Commodity contracts	Measurement Level	September 30, 2022 December 31, 2021
		Carrying Amount Fair Value Carrying Amount Fair Value
	2 $ 2 $ 2 $ 2 $	–$ – $ 621 $ 621 22 $ 22$ – $ – – $ –$ 257 $ 257 33 $ 33$ 11 $ 11

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

10. Financial instruments and financial risk management (continued)

d. Fair value of financial instruments (continued)

The fair values of financial instruments have been determined by various valuation methods as defined below:

• Level 1: fair value is based on quoted prices (unadjusted) in active markets for identical assets or liabilities;

• Level 2: fair value is based on inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and,

• Level 3: fair value is based on inputs for the asset or liability that are not based on observable market data (unobservable inputs).

There were no transfers between levels in the fair value hierarchy during the nine months ended September 30, 2022.

11. Capital disclosures

The Company considers its capital structure to include shareholders equity and debt:

	September	30, 2022		December 31, 2021
Shareholders’ equity	$	448,140	$	364,959
Bank debt	$	153,859	$	195,422

The Company monitors capital based on annual cash from operations before changes in non-cash working capital and capital expenditure budgets, which are updated as necessary and are reviewed and periodically approved by the Board of Directors.

At September 30, 2022 and December 31, 2021, the Company’s capital structure was subject to the banking covenant disclosed in note 3. No changes were made to the capital policy in 2022.

12. Finance expense

	Three months ended September 30 Nine months ended September 30
	2022 2021 2022 2021
Cash interest and finance costs Interest on lease obligations Realized gain on interest rate contracts Change in fair value of interest rate contracts Accretion of decommissioning liability_(note 5) Accretion of debt transaction costs(note 3) Accretion of lease obligations(note 4)_	$ 2,677 $ 2,824 $ 7,353$ 8,415 86 88 259 274 – 304 (393) 506 – (661) 364 (2,849) 106 45 238 112 102 133 357 342 (11) (39) (106) (122)
	$ 2,960 $ 2,694 $ 8,072$ 6,678

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Yangarra Resources Ltd. Notes to the Condensed Interim Consolidated Financial Statements

For the three and nine months ended September 30, 2022 and 2021 (unaudited, in thousands of Canadian dollars, except per share and per unit amounts)

13. Revenue

The Company derives its revenue from contracts with customers primarily through the transfer of commodities at a point in time representing the following major product types:

	Three months ended September 30 Nine months ended September 30
	2022 2021 2022 2021
Crude Oil Natural Gas Natural Gas Liquids	$ 34,738 $ 17,728 $ 88,902$ 47,036 16,120 9,792 56,813 25,748 11,933 8,360 37,049 20,100
	$ 62,791 $ 35,880 $182,764$ 92,884

At September 30, 2022, receivables from contracts with customers, which are included in trade accounts receivable, were $27,022 (December 31, 2021 – $16,620).

14. Contingency

In the normal conduct of operations, there are other pending claims by and against the Company. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable with assurance. In the opinion of management, based on the advice and information provided by its legal counsel, the final determination of these other litigations will not materially affect the Company’s financial position or results of operations.

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